Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

MOLTON, ALLEN & WILLIAMS, INC. v. HARRIS

August 30, 1977

MOLTON, ALLEN & WILLIAMS, INC., Plaintiff,
v.
PATRICIA ROBERTS HARRIS et al., Defendants



The opinion of the court was delivered by: PRATT

 This is an action for breach of contract. The plaintiff alleges that it had a contract with the defendant, the Government National Mortgage Association (GNMA), a unit of the Department of Housing and Urban Development, to purchase 38 FHA-insured mortgage options. It prays for $3 million in damages, plus interest, for breach of the alleged contract. In addition to GNMA, the Secretary of Housing and Urban Development and the President of GNMA are named as parties defendant.

 The matters presently before the Court are the defendants' motion to dismiss for want of jurisdiction and the parties' cross motions for summary judgment. The defendants argue that this Court lacks subject matter jurisdiction over plaintiff's action and that exclusive jurisdiction lies in the Court of Claims pursuant to the Tucker Act, 28 U.S.C. §§ 1346(a)(2), 1491. All parties agree there are no material facts in dispute.

 Plaintiff alleges jurisdiction on six separate grounds: 5 U.S.C. §§ 702-04 (judicial review of administrative action), 12 U.S.C. §§ 1702, 1723a (waiver of sovereign immunity for defendants herein), 28 U.S.C. § 1331(a) (federal question), 28 U.S.C. § 1332(a)(1) (diversity of citizenship), 28 U.S.C. § 1337 (regulation of commerce and monopolies), and 28 U.S.C. § 2201 (declaratory judgments). In our opinion, three of these allegations are obviously without merit. The Supreme Court has held that section 10 of the Administrative Procedure Act, 5 U.S.C. §§ 701-06, does not afford an independent grant of subject matter jurisdiction. Califano v. Sanders, 430 U.S. 99, 97 S. Ct. 980, 51 L. Ed. 2d 192 (1977). It has been uniformly held that the Declaratory Judgment Act, 28 U.S.C. § 2201, does not afford an independent ground for federal jurisdiction. E.g., Continental Bank & Trust Co. v. Martin, 112 U.S. App. D.C. 354, 303 F.2d 214, 215 (1962). The better view, and the rule in this District, is that "sue and be sued" clauses, such as 12 U.S.C. §§ 1702 & 1723a, are not jurisdictional grants. See Lindy v. Lynn, 501 F.2d 1367, 1369 (3d Cir. 1974); Trans-Bay Eng'rs & Bldrs., Inc. v. Lynn, 396 F. Supp. 265, 268 (D.D.C. 1975), modified on other grounds, 179 U.S. App. D.C. 184, 551 F.2d 370 (1976); *fn1" Ghent v. Lynn, 392 F. Supp. 879, 880-81 (D. Conn. 1975); cf. Korman v. FHA, 72 App. D.C. 245, 113 F.2d 743, 746 (1940) (sue and be sued clauses only waive sovereign immunity). Three colorably meritorious allegations of jurisdiction remain: diversity of citizenship, regulation of commerce and monopolies, and federal question.

 I. DIVERSITY OF CITIZENSHIP JURISDICTION

 Normally, diversity jurisdiction is not an issue in actions against Federal Government officials in their official capacities. The historic rule is that agencies and instrumentalities of the Federal Government are citizens of no state for diversity purposes and that, therefore, because all parties on each side of a controversy must be citizens of different states for diversity jurisdiction to lie, diversity jurisdiction never lies in an action against the Federal Government or its officials in their official capacities. See Texas v. ICC, 258 U.S. 158, 160, 42 S. Ct. 261, 66 L. Ed. 531 (1922); Hancock Fin. Corp. v. FSLIC, 492 F.2d 1325, 1329 (9th Cir. 1974). Recently, however, the Court of Appeals for this Circuit placed a gloss on that historic rule. In Trans-Bay Eng'rs & Bldrs., Inc. v. Hills, 179 U.S. App. D.C. 184, 551 F.2d 370, 376 (1976), the Circuit Court held that the Secretary of Housing and Urban Development, a defendant herein, is a citizen of the District of Columbia for diversity purposes and that diversity jurisdiction lies when a citizen of another jurisdiction sues the Secretary. The defendants have persuasively argued that this holding is "plainly erroneous," premised on "no credible authority," and would "materially expand diversity jurisdiction" to the detriment of the Court of Claims' exclusive jurisdiction. We, however, are bound to follow the holding unless it is in direct conflict with a holding of the Supreme Court, even though it appears anomalous.

 It could be argued that Trans-Bay does not significantly abridge the Court of Claims' jurisdiction because it only applies to federal officials for whom Congress has otherwise waived sovereign immunity. This argument, however, virtually transforms a waiver of sovereign immunity into a grant of federal jurisdiction and renders virtually meaningless the many waivers of sovereign immunity which are coupled with specific grants of federal jurisdiction, e.g., 15 U.S.C. § 634(b)(1) (Administrator of Small Business Administration), 19 U.S.C. § 2350 (Secretary of the Treasury), 39 U.S.C. §§ 401, 409 (Postal Service).

 In further support of their argument that diversity jurisdiction does not lie here, defendants assert that the United States is an indispensable party to this action and that because joinder of the United States would destroy complete diversity, we cannot sustain the allegation of diversity jurisdiction. *fn2" Defendants cite several cases which are superficially supportive of this argument. E.g., Mine Safety Appliances Co. v. Forrestal, 326 U.S. 371, 90 L. Ed. 140, 66 S. Ct. 219 (1945); Zapata v. Smith, 437 F.2d 1024 (7th Cir. 1971). These cases held that the United States was an indispensable party because a money judgment was sought from the United States Treasury and that because the United States could not be joined the action must be dismissed. Close scrutiny of these cases reveals, however, that the reason the United States could not be joined was because sovereign immunity had not been waived. See generally 7 Wright & Miller, Federal Practice and Procedure § 1617, at 172 (1972). None arose in the context of deciding whether an indispensable party destroyed complete diversity, and we have been unable to find any indispensable party cases involving the United States which arose in such a context. Our inability to find these cases may be due to the novelty of Trans-Bay 's holding that a federal officer can be subject to diversity jurisdiction. In any event, these cases are not in point because we do have a waiver of sovereign immunity here. This appears to support plaintiff's position that diversity jurisdiction lies in this action. It does nothing, however, to resolve the anomaly -- which is the true meaning of Trans-Bay -- that a waiver of sovereign immunity is a virtual grant of federal jurisdiction because it can be coupled with an invocation of diversity or federal question jurisdiction.

 II. FEDERAL QUESTION AND COMMERCE AND MONOPOLIES JURISDICTION

 A. Federal Common Law as the Basis for Federal Question Jurisdiction.

 The Supreme Court has held that federal question jurisdiction exists where federal common law provides the rule of decision. Illinois v. City of Milwaukee, 406 U.S. 91, 100, 31 L. Ed. 2d 712, 92 S. Ct. 1385 (1972). Plaintiff argues that because the federal common law of contract provides the rules of decision in the instant case, Illinois v. City of Milwaukee controls and federal question jurisdiction properly lies here.

 It seems obvious that plaintiff's argument does not state the proper rule. If plaintiff's argument were to prevail, every Government contracts case where the waiver of sovereign immunity was not dependent solely on the Tucker Act could be brought in a federal district court because the federal common law of contracts provides the rules of decision in all Government contracts cases.


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.